The role of demand in land re-development

Carozzi, Felipe ORCID: 0000-0002-0458-5531 (2020) The role of demand in land re-development. Journal of Urban Economics, 117. ISSN 1095-9068

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Abstract

Vacant, previously-developed land in cities can generate negative externalities on surrounding areas, and is often the target of policies to promote re-development. This paper provides estimates of the price sensitivity of land re-development, a crucial parameter for the success of these policies. My estimates measure how prices affect long-run conversion of unused or underused previously developed land in England. The empirical strategy uses school test scores and admission district boundaries in a boundary discontinuity design to generate variation in housing demand that is orthogonal to re-development costs. Results show that the probability of re-development is effectively sensitive to housing prices. Estimates indicate that a 1% increase in prices leads to a 0.07 percentage point reduction in the fraction of hectares containing brownfield land. Price differences or substantial subsidies could lead to a significant amount of re-development in the long run. This is confirmed by observed land use changes between 2007 and 2011 being disproportionately concentrated in high price areas.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/journal-of-u...
Additional Information:	© 2020 Elsevier B.V.
Divisions:	Geography & Environment
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HC Economic History and Conditions
JEL classification:	R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R14 - Land Use Patterns R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets
Date Deposited:	05 Mar 2020 11:30
Last Modified:	01 Nov 2024 04:28
URI:	http://eprints.lse.ac.uk/id/eprint/103690

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